Loss and/or expense - Construction Contracts - page 308

189 Does the contractor have a duty to mitigate its loss?
If the contractor wishes to claim loss and/or expense or damages under any of the standard
form contracts, it has a duty to mitigate (lessen) its loss. Therefore, a contractor has a duty
to do what it reasonably can to reduce the amount of loss. The principles of mitigation are
straightforward:

• The contractor cannot recover damages which may result from the employer's actions if

it would have been possible to avoid such damage by taking reasonable measures.
The contractor cannot recover damages which have been avoided by taking measures
greater than what might be considered reasonable.
Thecontractorcanrecoverthecostoftakingreasonablemeasurestoavoidormitigateits
potential damages.

•

•

The contractor is not obliged to do everything possible. If that was the case, a successful
claimfordamagesorlossand/orexpensemightberare.Thecontractorneednotdoanything
more than an ordinary prudent person would do in the course of business. 21
Obviously, for mitigation to be relevant, the contractor must have the right, in principle,
to the damages. It is important to understand that a failure to mitigate will not give rise to a
legal liability, but it will reduce the damages recoverable to what they would have been had
mitigating measures been taken.
For example, if the architect gave an instruction which resulted in a number of operatives
standing idle for a few days, the contractor would not be entitled simply to keep the oper-
atives on site on full pay until the opportunity arose for full employment again. It would be
obliged to make reasonable endeavours to use the operatives elsewhere on that or another
site. The costs incurred by the contractor until, acting reasonably, it was able to move the
operatives and the costs of the move would be likely to be recoverable as part of a claim.
In practice, the courts would not examine the contractor's attempts to mitigate too critically.
The contractor's costs would probably still be recoverable if it acted reasonably, even if the
contractor's actions resulted in an increase in its loss. 22
The extension of time clauses of many standard form contracts require the contractor to
use its best endeavours to prevent delay occurring and to reduce the effects of a delay.
Where the contractor is claiming loss and/or expense under a standard form contract, it
is for the employer to demonstrate that the claimant has failed to mitigate. 23 Under most
standardformsthatissomethingwhichthearchitectwouldhandle.Indoingso,thearchitect
would be entitled to request reasonable substantiating information.